During the September quarter, interest cost for Indian companies rose 36 per cent on year, Crisil said.

At 8.5 per cent, the repo rate -- RBI's policy lending rate -- is at its highest since July 2008 after the RBI raised rates 13 times between March 2010 and October 2011, in a tightening cycle that is widely seen to be ending.

"While the interest rate cycle has largely peaked, we believe that interest coverage ratio will remain under pressure over the next few quarters as Corporate India's sales growth could slow down on the heels of lower GDP growth," Crisil said.

The median interest coverage ratio has fallen to 4.8 times in the September quarter against 7.8 times a year ago. The average interest coverage ratio for these companies in the past five years was 8.4 times, it said.

Companies with an interest coverage ratio below 2 times have risen sharply to 117 in the September quarter, from 69 in July-September 2010, it added.

For the first time in the past eight quarters, operating profit and reported profit after tax of these companies declined in the July-September 2011 quarter from a year earlier, Crisil said. The last decline was in July-September 2009 quarter, during the global financial crisis.

Last month, Crisil said Indian companies' profits would decline and margins shrink by 200 basis points in October-December on slower volume growth, higher raw material and interest costs and limited ability to raise prices.